Computer Outsourcing Services Announces Third Quarter Results.

NEW YORK--(BUSINESS WIRE)--September 18, 1995--Computer Outsourcing Services, Inc. ("COSI") (Nasdaq National Market: COSI) today announced unaudited financial results for the third quarter and nine months ended July 31, 1995.

Revenues for the third quarter of fiscal 1995 rose 66% to a record $6,614,216 from $3,994,651 in the 1994 third quarter. Pre-tax income of $51,545 in the fiscal 1995 third quarter compared with pre-tax income of $59,936 in the fiscal 1994 third quarter. Revenues for the nine month period of fiscal 1995 increased 33% to a record $15,334,972 from $11,493,225 in the same period of fiscal 1994. Net income for the fiscal 1995 nine month period was $120,273, or $.02 per share, compared to net income of $456,726, or $.13 per share, in the comparable 1994 period.

Management noted that the revenue increases in the three and nine month periods were primarily due to recent acquisitions and continued strength in the Company's outsourcing division and growth in payroll processing operations. Revenue increases were more than offset, however, by ongoing consolidation of these acquisitions and the continued investment in payroll personnel, marketing and technology.

Zach Lonstein, President and CEO of COSI, said, "Third quarter revenues reflect continued expansion at COSI, both internally and through the acquisitions of Key-ACA in May and MCC in June. In line with our strategy to expand our presence in the payroll processing industry, we are pleased to report that third quarter revenues from payroll processing increased 56% over the immediately preceding second quarter of fiscal 1995. Of this growth, over 9% was achieved internally. While we believe this reflects initial success from our sales and marketing efforts, the additional costs to standardize our payroll processing systems and integrate recent acquisitions, and the cost of the marketing program, continue to impact COSI's bottom line."

Mr. Lonstein continued, "On an operating basis, COSI's consolidated operations remain cash flow positive and our balance sheet remains strong with net working capital in excess of $2.2 million. As we progress through this early phase of development as a payroll processing company, we are confident that we have the stability and resources of our outsourcing business to serve as a foundation for long term growth."

COSI provides payroll and tax filing services to 3,600 customers nationwide and offers specialized data processing services to niche markets including publishing, direct marketing, apparel importing, healthcare, banking and transportation. -0-

                  Computer Outsourcing Services, Inc.
                    Consolidated Income Statements
                           (Unaudited)

                           Three Months Ended      Nine Months Ended
                                July 31,                July 31,
                            1995        1994       1995         1994

Revenues               $6,614,216   $3,994,651  $15,334,972  $11,493,225

Pre-tax income             51,545       59,936      299,544      778,002

Provision for
 income taxes(a)         $ 50,109     $ 14,134    $ 179,271    $ 321,276

Net income                 $1,436      $45,802    $ 120,273    $ 456,726
Net income per
 common share                   -        $0.01        $0.02        $0.13

Weighted average
 number of
 shares outstanding     3,677,673    3,380,603    3,609,703    3,248,089

(a) The tax provision for the three months ended July 31, 1995 is
largely due to the fact that Goodwill Expense for several of the
company's acquisitions are not deductible for calculating the amount
of taxes due.

CONTACT: Computer Outsourcing Services, Inc.

Roger Kaufman, CFO

[phone]

or

COSI'S INVESTOR RELATIONS COUNSEL:

The Equity Group

Carolyn Bancone [phone]

Tamara Ehlin [phone]